Question

Costa Rica is a top exporter of coffee. The highest quality coffee is sold abroad, and the lower quality coffee is consumed by native Costa Ricans. Which of the following statements best describes the economic questions this paragraph addresses?

A) For whom to produce and What to produce?
B) For whom to produce and When to produce?
C) How to produce and For whom to produce?
D) What to produce and How to produce?

Answer 1

A) For whom to produce and What to produce?

Step-by-step explanation:

Every economy of the world is faced with relative scarcity of resources, therefore the government of each economy must answer some basic economic problems of what to produce, how to produce, for whom to produce.

The question of what to produce. An economy must decide what type of goods to produce and in what quantity, whether capital or consumer goods.

The question of how to produce relates to the technique of production, whether to use labor intensive or capital intensive method of production.

The question of for whom to produce. has to do with the distribution of final goods produced, in a market economy, the price mechanism answers this.

In this question, Costa Rica addressed the problem of what to produce by deciding to produce coffee and the question of for whom to produce by deciding to allocate his final goods between export and internal consumption.